Income Protection Insurance

Falling sick or being unable to work can be problematic as a contractor, but with Income Protection Insurance, you will have one less thing to worry about.

One of the benefits of being a permanent employee is that there are many protection and insurance policies already in line on your behalf. However, if you are a contractor this is something you will need to secure yourself. A permanent employee will benefit from having at least three months paid leave if they are unable to work, but as a contractor, if you want such security, it is down to you.

But don't dismay, there are a variety of ways in which you can protect yourself in the unfortunate event that you are unable to work. Permanent health insurance or PHI is the ideal way to make sure that you, your family and your financial affairs are kept protected. This allows you to set aside a monthly amount that will cover you in the future if needed.

For more information, please fill in your details below.

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How do I set it up?

It is usually dealt with through an insurance company who will help you with the right plan for your financial situation. A waiting period will be set up, which means that you select a period of time for which you wait to receive your pay out, much like an excess period. This is determined by you. The longer the period of deferred time the less the protection plan will cost you.

How much can I protect?

It is important to be realistic, think about your current living expenses and decide what you could do without. But if a long term illness arises it is wise to think about how your living circumstances might change. For example, getting rid of the car if you are no longer travelling might seem like a good idea, however if you are to be attending regular doctors appointments this could be an oversight. You can protect up to 70% of your income through your income protection insurance policy.

Will it cover me in retirement?

A situation could occur where you are unable to return to work for the rest of your working life. As a contractor it is important that you choose a policy that covers you up to your chosen retirement date. Make sure you check the date that your pension is due to be paid out, so you don't have a period of time where you are not covered.

What about inflation?

You can select a level of cover that is inflation proof. This means that as the cost of living rises, your protection plan takes it into account. If you don't need your protection plan for say, 20 years, the cover amount will be far different from now, so don't put yourself out.

It is vital that you make sure all ground is covered. For example, your policy should state that you will receive your payment if you are unable to carry out your own occupation. Otherwise you could be liable to work in another industry or a more menial job if the definition isn't specific enough. As a contractor, your cover needs to reflect this.

Getting your financial situation in order is key to being a successful contractor, less worry and hassle for you and more time to work and enjoy life.

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CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: Albany House, 5 Omega Park, Alton, Hampshire, GU34 2QE. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.